Overcoming harmful psychological financial issues
Have you hidden financial information from your spouse (financial infidelity)? Are you overcompensating when sending money to your adult children (financial enabling)?
Do you purchase luxuries on credit when the impulse hits you (compulsive buying disorder)? Do you have a fear of budgeting (financial denial)?
These are the types of destructive behaviors that financial psychologists will help you identify and correct.
To get started, test yourself by taking a free test called the Klontz Money Behavior Inventory (KMBI).
Developed by author and associate professor Dr. Brad Klontz, Psy.D., CFP (tinyurl.com/yk47rv2e), the KMBI identifies “patterns of destructive financial behaviors and beliefs that may impede individuals from achieving their financial goals.”
The test focuses on nine categories:
• Compulsive buying disorder
• Gambling disorder
• Hoarding disorder
• Workaholism
• Financial dependence
• Financial denial
• Financial enabling
• Financial enmeshment
• Financial infidelity
You can take the test, which involves 50-plus questions, at tinyurl.com/3bw4b52p. Each question offers multiple selections for an answer, ranging from strongly disagree to strongly agree, with four selections in between. You will receive your results by email.
The test’s instructions state that “You will get the most value from the test if you read each statement and go with your first impulse,” adding that “you must avoid falling prey to ‘social desirability.’ This is the psychological impulse that tells us that we must show our best selves.” Your first impulse “is likely the best reflection of what is happening in your subconscious and what is driving your actual financial behaviors.”
Your scores (ranging from one to six) will translate into a rank of low, medium or high, with low suggesting you do not exhibit the money behavior, medium suggesting you exhibit some characteristics, and high suggesting you exhibit many of the characteristics.
When you receive your results, you also will get detailed descriptions about the categories. For example, compulsive buying disorder is described as “a serious money disorder and is associated with anxiety, depression, low self-esteem, eating disorders, substance abuse, and a tendency to try to escape from or avoid stress. Compulsive buyers believe that the acquisition of objects will compensate for or neutralize negative feelings, which is just not the case.”
You might be curious about the definitions for the other categories. Here are some additional explanations:
• Financial Dependence: This “can take on many forms, including a dependency on partner, parents, Trust funds, or the government to take care of one’s financial needs. It is a primary reason that victims of domestic violence return to their abusers, and a common source of conflict and frustration among family members.”
• Financial Denial: “Many of those who are experiencing financial stress attempt to cope by simply not thinking about money or trying to avoid dealing with it. Rather than addressing financial situations or problems, they try to ignore them.”
• Financial Enabling: Enablers “often put themselves at financial risk to help others. They have trouble saying ‘no’ to financial requests from children, friends, and/or family members, and may avoid making clear arrangements for repayment of loans.”
• Financial Enmeshment: This involves “the blurring of boundaries between adults and minor children around money.” It also includes “the ‘use’ of children by adults to bear unreasonable responsibility for, or worry about, adult financial situations.”
• Financial Infidelity: “Forty percent of Americans admit that they lie to their spouses about the details of their spending. Financial infidelity involves lying about, hiding, or omitting information about one’s financial behaviors from one’s spouse or partner.”
Keep in mind, as the test points out, “Nothing contained herein constitutes investment advice,” and the information “should be used in consultation with a qualified financial professional.”
Still, the test can provide insight on your approach to how you view money and manage it, pointing out strong and weak points. From there, you can look into resources to help you improve your perspective when it comes to the way you handle financial issues.
Seasoned investment counsel (tinyurl.com/52nus8hz) and award-winning columnist and author, Julie Jason, JD, LLM, promotes financial literacy and investor protection. Read her latest book, “The Discerning Investor: Personal Portfolio Management in Retirement for Lawyers (and Their Clients)" (tinyurl.com/4u7h9pjs), published by the American Bar Association. Write to Julie at readers@juliejason.com. While all questions cannot be answered, each email is read and reviewed and can lead to discussion in a future column.